Lucky Lamprell, or How to Catch a Falling Knife

It may appear a little strange, me using the headline “Lucky Lamprell” on the day that Lamprell shares gapped-down some 35%. But Lamprell has been a lucky stock for me in several ways…

1) On 26 July I told your about my Lucky Escape from Lamprell, i.e. how I had exited my long position the day before that day’s massive price fall.

2) On 5 August I told you in my Update on Lamprell how I had managed to trail the stop order on my re-entered position to better than break-even.

3) On 26 September I forgot to tell you how my re-entered Lamprell position had stopped-out on my trailed stop orderĀ at a price of 108.9 for a 33-point profit.

4) Today, the gapped-down price of 74.86 (it had been even lower during the day) has allowed me to try taking yet another bite of this (falling) cherry.

This sequence of events provides a good example of “how to catch a falling knife” according to the principles set out in my Position Trading book.

The current state of play is shown in the following chart courtesy of ETX Capital, which I have annotated with horizontal lines to show the level of my last (profitable) stop-out and the lower price of today’s re-entry.

Lamprell Catching a Falling Knife

They say that profit warnings come in threes, and you should buy on the third one. I think that Lamprell has notched up its fourth consecutive profit warning now, so let’s hope it’s even luckier for Lamprell!

Two Steps to Better Spread Betting:

1) Buy the Better Spread Betting Book
2) Sign up with Capital Spreads, IG, ETX Capital, or Spread Co

Disclaimer: this posting is for general education only; it is not trading advice.